Fidelity Canada extends factor offering with value and momentum ETFs

Jun 12th, 2020 | By | Category: Equities

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Fidelity‘s Canadian operation has rolled out several new ETFs on Toronto Stock Exchange, expanding its offering of factor strategies with a series of rules-based value and momentum exposures and introducing an actively managed global fixed income fund.

Fidelity Canada expands factor offering with value and momentum ETFs

Fidelity now offers dividend, value, quality, momentum, and low volatility strategies within its factor ETF suite.

Factor ETFs

The asset manager has introduced four value and four momentum factor ETFs. Listed with management fees ranging from 0.35% to 0.45%, the ETFs provide Canadian, US, US currency-hedged, and global developed ex-North America geographic equity exposures.

The funds complement Fidelity’s existing suite of dividend, quality, and low volatility factor-based strategies.

Each ETF tracks a proprietary index that selects a subset of stocks from each sector in the parent universe, choosing companies that have the largest exposure to the relevant size-adjusted factor score.

The indices are sector neutral, matching the sector weights of their parent universes. Within each sector, constituents are weighted using a combination of market capitalization and size-adjusted factor score.

The Fidelity Canadian Value Index ETF (FCCV CN) tracks the Fidelity Canada Canadian Value Index and comes with a management fee of 0.35%.

The Fidelity US Value Index ETF (FCUV CN) tracks the Fidelity Canada US Value Index and comes with an expense ratio of 0.35%.

The Fidelity US Value Currency Neutral Index ETF (FCVH CN) tracks the Fidelity Canada US Value Currency Neutral Index and comes with an expense ratio of 0.38%.

The Fidelity International Value Index ETF (FCIV CN) tracks the Fidelity Canada International Value Index and comes with an expense ratio of 0.45%.

The Fidelity Canadian Momentum Index ETF (FCCM CN) tracks the Fidelity Canadian Momentum Index and comes with an expense ratio of 0.35%.

The Fidelity US Momentum Index ETF (FCMO CN) tracks the Fidelity US Momentum Index and comes with an expense ratio of 0.35%.

The Fidelity US Momentum Currency Neutral Index ETF (FCMH CN) tracks the Fidelity US Momentum Currency Neutral Index and comes with an expense ratio of 0.38%.

The Fidelity International Momentum Index ETF (FCIM CN) tracks the Fidelity International Momentum Index and comes with an expense ratio of 0.45%.

Kelly Creelman, Senior Vice President, Products, Fidelity Investments Canada, commented, “We are excited to introduce these two new factors which build out the Fidelity factor ETF line-up. By adding value and momentum to the suite that includes high dividend, low volatility, and high quality, this gives investors and advisors a full complement of factors to use as portfolio construction tools. Additionally, these new factors have low correlations with other factors which may be helpful during these times of market volatility.”

Active fixed income

Fidelity has also launched the Fidelity Global Investment Grade Bond ETF (FCIG CN) which comes with a management fee of 0.50% and distributes income on a monthly basis.

The fund is designed as a core fixed income solution that is unconstrained from a geographic and sector perspective. It invests primarily in investment-grade securities with a maximum 25% exposure to high yield. The fund’s benchmark is the Bloomberg Barclays Global Aggregate Bond Index.

Currency risk will generally be left unmanaged with only up to 10% of foreign currency exposure being hedged at any point in time.

Commenting on the bond ETF, Creelman said, “This fund builds off the success of the Fidelity Global Core Plus Bond ETF (FCGB CN), also actively managed by Jeff Moore and Michael Plage, which has been one of the top-selling active ETFs in Canada since its launch in September 2019. Our clients told us that they’re interested in a version of FCGB for more risk-averse investors, so we’re thrilled to bring FCIG to the market to meet this need.”

The Fidelity Global Core Plus Bond ETF also covers the global fixed income opportunity set but may hold up to 70% of its assets in non-investment-grade securities. The fund also comes with a management fee of 0.50%.

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